TaxTMI 
TaxTMI 
2023 (8) TMI 1721
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....eign Exchange Fluctuation Loss' of INR 1,53,24,254/- for the purpose of computing the profits of the eligible undertaking and thereby re-computing the deduction under section 80-IC of the Act. 2(b) Without prejudice to Ground no 2(a) above, the Ld CIT(A) has grossly erred both on facts and in law in upholding the action of the Ld AO of allocating Foreign Exchange Fluctuation Loss to the eligible undertaking in the ratio of closing value of inventory of raw materials & finished goods. 3(a) The Ld. CIT(A) has grossly erred both on facts and in law in upholding the action of the Ld AO of disallowing the closing balance of Provision for Leave Encashment' amounting to INR 26,08,537/- as appearing in the balance sheet of appellant instead of the Provision for Leave Encashment of INR 4,80,093/- created and debited to the Profit & Loss a/c during the year under consideration. 3(b) Without prejudice to Ground no 3(a) above, the Ld CIT(A) has grossly erred both on facts and in law in upholding the action of the Ld. AO in not allowing deduction for Provision Leave Encashment amounting to INR 480,093/- created and debited to the Profit & Loss a/c during the y....
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....ocation of foreign exchange Fluctuation loss to 80IC undertaking at Sikkim, provision for Leave Encashment of Rs. 26.08 lacs, u/s 14A r.w. Rule 8D(2)(iii) of Rs. 23.33 lacs and further upheld the disallowed for Fringe benefit Tax in computing books profits u/s 115JB of Rs. 8 lacs. 5. Aggrieved by the order of the Ld. CIT(A) dated 01/11/2019, the assessee preferred the present appeal on the ground mentioned above. 6. The ground No.1 is regarding Allocation of Advertisement & Public Expenses to Industrial undertaking u/s 80-IC Unit at Sikkim. During the year, the assessee claimed advertisement and publicity expenses amounting to Rs. 35,30,000/- and business promotion expenses amounting to Rs. 5,70,000/-. As per assessee the said allocations have no direct or immediate connection with the Sikkim unit eligible for deduction under Section 80-IC. The above said issue has been dealt and decided in assessee's own case for AY 2011-12 in ITA No.7483/Kol/2017, wherein it is held that the general head office expenditure shall not be allocable to unit eligible for deduction u/s 80-IC of the Act. "49. So, following the decision rendered by the Co-ordinate Bench of the Tribunal, we....
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....t of raw material used at the industrial undertaking, available at page 193 of the paper book. Ld. CIT (A) after taking into account working given by the assessee company at page 193 of the paper book restricted the allocation to the tune of Rs. 68.33 lakhs. No doubt, foreign exchange loss being in the nature of indirect/non-operating expenses must not be allocated to the eligible industrial undertaking. However, when the assessee company has come up with specific working/details of suffering foreign exchange loss on account of import of raw material used at the industrial undertaking, the ld. CIT (A) has rightly thrashed the issue on facts and directed the AO to reduce such allocation to Rs. 68.33 lakhs as against Rs. 1 crore estimated by the AO. So, again we find no illegality or perversity in the findings returned by the ld. CIT(A). Consequently, Ground No.1 of assessee's appeal for AY 2009-10 is allowed and Grounds No.1, 2 & 3 of Revenue's appeal for AY 2009-10 are dismissed." By respectfully following the above ratio and finding the parity, the ground No.2 of the assessee is allowed. 10. The assessee has not pressed ground No.3, accordingly, ground No.3 of the as....
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....A of the Act the Rule 8D of the Rules" 23. Hon'ble Apex Court in Godrej & Boyce Manufacturing Company Ltd. vs. DCIT-394 ITR 449 (SC) thrashed the issue in controversy as to invoking of the provisions contained under Rule 8D of the Rules by observing as under:- "37. We do not see how in the aforesaid fact situation a different view could have been taken for the Assessment Year 2002-2003. Sub-sections (2) and (3) of Section 14A of the Act read with Rule 8D of the Rules merely prescribe a formula for determination of expenditure incurred in relation to income which does not form part of the total income under the Act in a situation where the Assessing Officer is not satisfied with the claim of the assessee. Whether such determination is to be made on application of the formula prescribed under Rule 8D or in the best judgment of the Assessing Officer, what the law postulates is the requirement of a satisfaction in the Assessing Officer that having regard to the accounts of the assessee, as placed before him, it is not possible to generate the requisite satisfaction with regard to the correctness of the claim of the assessee. It is only thereafter that the provisio....
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....ium notes (OCPN) utilized for making investment in the shares/debentures of RUPL cannot be regarded as expenditure incurred exclusively in relation to earning of exempt income so at to invoke the provisions of section 14A. Moreover, the said investment had the potential of generating taxable income also as explained by the learned counsel for the assessee in the form of short term capital gains etc. In this regard, the learned DR has submitted that no such taxable income however was actually earned by the assesses during the years under consideration. The learned counsel for the assessee on the other hand has pointed out that no exempt income from the said investment was also actually earned by the assessee in the years under consideration. He has also relied on the decision of coordinate bench of this Tribunal in the case of Delite Enterprises Pvt. Ltd. (supra) as affirmed by the Hon'ble Bombay High Court stating that in the similar facts and circumstance, disallowance made under section 14A was held to be not sustainable." 27. So, an amount of Rs. 89.68 lakhs Rs. 32.44 lakhs and Rs. 17.76 lakhs in AY 2009-10, 2010-11 & 2011-12 respectively earned by the assessee as c....